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UK firms show reluctance to invest after Brexit vote, BCC says

UK businesses have become more cautious about the outlook and may be less inclined to invest and hire since the vote to leave the European Union, according to the British Chambers of Commerce.

PHOTO: REUTERS

[LONDON] UK businesses have become more cautious about the outlook and may be less inclined to invest and hire since the vote to leave the European Union, according to the British Chambers of Commerce.

Citing "muted business investment intentions," the lobby group used its first quarterly survey since the Brexit vote to call on Chancellor of the Exchequer Philip Hammond to take steps to lift confidence, including approving new infrastructure projects.

The BCC said its survey shows that UK economic growth has slowed since the referendum. While manufacturers have enjoyed a lift from the weaker pound, the measure of domestic and export sales at services companies is at the lowest since 2012.

The National Institute of Economic and Social Research estimated on Friday that GDP rose 0.4 per cent in the three months through September, down from 0.7 per cent in the period through June.

There is speculation that the government will use next month's Autumn Statement to unveil new fiscal measures.

Mr Hammond told Bloomberg on Thursday that his plans will include investments in targeted projects to absorb the "shock" of the June vote. He's already rowed back on his predecessor's fiscal squeeze, scrapping a target for a budget surplus by the end of the decade.

It's a "crucial opportunity to incentivise business investment and overseas trade," said Adam Marshall, acting director general of the BCC. "Final and irrevocable decisions on infrastructure projects, both big and small, would also boost business confidence."

Separately, Visa said consumer spending picked up in September, led by growth in recreation and culture as well as restaurants and bars. It's index showed spending up an annual 2.4 per cent last month, compared with 0.1 per cent in August.

The report reinforces the picture of consumer resilience after surveys in the past month showed business and household confidence returning to pre-Brexit levels.